Brooks Automation, Inc. (BRKS)
F4Q 2012 Earnings Conference Call
November 08, 2012 04:30 p.m. ET
Steve Schwartz – President & CEO
Martin Headley – CFO
Edwin Mok – Needham & Company
Patrick Ho – Stifel Nicolaus
CJ Muse – Barclays
Ben Pang – Caris Company
David Duley – Steelhead Securities
Jairam Nathan – Sidoti & Company
Satya Kumar – Credit Suisse
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Thank you very much, Chantel and good afternoon everybody. I’d like to welcome each of you to the Year-End Financial Results Conference Call for Brooks Financial 2012 Year. We’ll be covering the results of the fourth quarter that ended on September 30 and providing an outlook into the quarter, the first quarter that will end on December 31. Our press release was issued at the close of market today and is available at the investor relations page of our website www.Brooks.com as are the illustrative PowerPoint slides to be used during our prepared comments during today’s call.
I’d like to remind everybody that during the course of the call we’ll be making a number of forward-looking statements within the meaning of the Private Litigation Securities Act of 1995. There are many factors that may cause actual financial results for other events to differ from those identified in such forward looking statements. I will refer you to the section of our earnings release titled Safe Harbor statement. The Safe Harbor slide in the aforementioned PowerPoint presentation on our website and the company’s various filings with the SEC. Make no obligation to update these statements should future financial data or events occur that differ from forward-looking statements presented today.
I’d also like to note we also make reference to a number of non-GAAP financial measures which are used to, in addition to and in conjunction with results presented in accordance with GAAP. Management believes these non-GAAP measures provide an additional way of viewing aspects of our operations and performance and that when considered with the GAAP financial results and the reconciliations of GAAP measures provide a more complete understanding of the Brooks’ business measures. Non-GAAP measures should not be relied upon to the exclusion of GAAP measures.
With me today is Brooks’ President and Chief Executive Officer, Steve Schwartz who will follow my introductory remarks with commentary on the business environment and our current initiatives. I’ll then provide an overview of the fourth quarter financial results and a summary of our financial outlook for the quarter ending December 31st which is the first quarter of our new fiscal 2013. We’ll then take your questions.
During our prepared remarks I will from time-to-time make reference to a slide number and those are the slides that are available to everybody on the Investor Relations page of our website. An introduction and to frame the events of the quarter a summary is provided on Slide #3.
During the quarter we experienced a 30% sequential downturn in front-end semiconductor product revenues, reflecting weak demand from some of our larger customers. Despite this we ended with revenues at the high-end of our guidance range with Life Science System revenues increased by 25% and we saw growth in revenue to adjacent markets, albeit at the low base. We also had a weak order environment during the quarter with bookings of $97.5 million that points to a continued downturn in the market environment.
Recognizing that difficult market environment we initiated a restructuring program during the quarter that covered all areas of our company. This program also encapsulated previously planned activities to reduce the cost footprint of our Life Science Systems business. Overall, we reduced head count by approximately 10% in executing on the program from September through November.
Let me also talk briefly about a couple of non-operating matters that have a significant impact on the reported financial results. Firstly, reflecting the cumulative probability that the company has driven over this last cycle, management came to the conclusion that it was appropriate and necessary to reverse $121.9 million of valuation allowances that we had maintained for many years against deferred tax assets arising from prior tax losses. This resulted in a $1.85 per share one time income tax benefit that is reflected in our fourth quarter GAAP earnings of $2.08 per share. Following these reversals the company will reflect a full tax rate of around 35% although our cash tax rate will remain below 10%.
The second significant one time item was the termination of the previously frozen U.S. defined benefit plan that resulted in an $8.9 million, or $0.14 per diluted share, settlement charge against fourth quarter earnings. We assessed and determined that the return on the $6.4 million cash used in this action provided a beneficial return on investment and removed a residual non-operating liability from our balance sheet.
With that scene setting, let me introduce Steve. Thank you, Steve.
Thank you, Martin. Good afternoon, everyone, and thank you for joining our call. We’re glad to have a chance to speak with you again, and although we’re in a period of pull back in the Semiconductor Front End business, we have much progress to report to you. After remaining flat in revenue from March to June we were not able to resist the strong downdraft in the SEMI business. Our revenue in the September quarter was $119 million, down from $140 million in June.